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Don Dion
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Don Dion (, @DRDInvestments) is the owner and Chief Investment Officer of DRD Investments, LLC, based in Naples, FL. and Williamstown, MA., a family office focused on managing a long/short hedge fund, real estate assets, venture capital, and various other financial assets for... More
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  • IPO Quiet Period Expiration: Summit Materials
    • The 40-day quiet period on SUM ends 4/21; this allows IPO underwriters Citigroup, Goldman Sachs, Barclays, Blackstone, BofA Merrill Lynch, Deutsche Bank, and others to publish reports on 4/22.
    • SUM is a construction materials company, having realized a 197% increase in revenues between 2010 and 2014.
    • Recent research shows above-market returns, beginning approximately one week prior to a firm's quiet period expiration, particularly if the firm has high quality underwriters.
    • We suggest investors buy into SUM early to reap full gains.
    • Full analysis here.
    Tags: SUM
    Apr 16 11:18 AM | Link | Comment!
  • Tesla Springs Forward In 2015

    With its stock trading near its 52-week low around $190, Tesla Motors (NASDAQ:TSLA) may present a buying opportunity for investors interested in the premium electric automobile manufacturer.

    Some Wall Street analysts have moved the stock to their buy lists, with one analyst, Dan Galves of Credit Suisse Group, suggesting shares may rise to reach the $290 range. Currently, the company has a significant backlog of orders, and Tesla reported that it had manufactured and sold the highest number of cars in the fourth quarter than any other three month period.

    However, some Wall Street experts remain somewhat cautious over Tesla layoffs in China and the Nevada Gigafactory.

    A 400% Stock Increase -- Still Impressive

    While Tesla shares are trading near 52-week lows, the stock has seen an increase in price of 400 percent over the last two years.

    (click to enlarge)


    In addition, sales of the electric automobiles did not meet expectations last year; however, total sales increased 50 percent over 2013 to reach 32,000 cars.

    This year, Tesla expects to sell 55,000 units, and by 2020, it expects to produce and deliver 500,000 cars. Moreover, the company forecasts sales in excess of 2 million by 2025. Thus, accelerating revenue and sales in 2015 represents a critical plank in its total growth strategy as the company increases capital expenditures now before demands on that capital grow in future years.

    Low-Risk Manufacturing Model

    Investors may also find it somewhat difficult to peg the actual number of unsold cars in Tesla's inventory. Some estimates suggest the company had 1,000 unsold vehicles, while other estimates suggested 3,000 unsold units. Regardless, Tesla remains committed to the build-to-order model, which will limit its exposure to high inventories of finished product. Furthermore, Tesla recently changed its terminology to describe finished product, which previously described autos in transit to customers and now includes all autos available for immediate sale.

    Cheap Oil: Not An Insurmountable Barrier

    Despite this dearth of data, Tesla may prove to be a sound long-term investment regardless of the decline in oil prices. While cheaper gas may slow sales of electric cars in some regions, gas remains prohibitively expensive in many countries. For example, gas in Hong Kong hovers around $8.50 per gallon.

    In addition, Tesla produces an excellent automobile in comparison to many gas-powered cars. Consumer Reports rates the Model S as a 99 out of 100 possible points, and in 2013, Motor Trend magazine made its very first unanimous selection for Best Car of the Year. Features such as speed, handling, design, ride, acceleration and fit rated extremely high. Finally, while the U.S. may face a present glut of oil due to the success of fracking, the market will eventually correct itself as producers slow the flow of oil.

    Positive Signs From New Jersey, Other States Could Follow

    Other positive news to affect the company includes a shift in New Jersey regulations that may soon allow residents of the state to purchase the automobile in New Jersey rather than traveling to New York of Pennsylvania. Previously, the Motor Vehicle Commission had banned Tesla from marketing its cars directly to state residents; however, the state's Senate Commerce Committee voted to change this, and Governor Chris Christie may see the bill on his desk soon. This would bode well for the company, which continues to face bans in Texas, Maryland and Arizona. Once New Jersey acts to end the ban, the other states may follow along quickly.

    Results Reveal Dominant Position in EV Market

    In February, the company released its fourth quarter results from 2014. According to Tesla, the company derived more revenue from the sale of electric cars than all other electric car manufacturers combined in 2014. In the two years from 2012 to 2014, non-GAAP revenue increased by 800 percent, GAAP revenue increased by nearly 700 percent, and gross margin levels increased to levels generally not seen in the automobile manufacturing industry.


    In addition, Tesla expects vehicle production and demand to accelerate in 2015. Last year, the manufacturer increased its number of service centers and stores by more than 40 percent, expanded its supercharger network by 400%, and began construction on its Gigafactory.

    Moreover, the company implemented numerous improvements to the Model S, and this led to a backlog of over 10,000 orders for the Model S and 20,000 reservations for the Model X at the start of 2015.

    Conclusion - Consider Buying Prior to May Earnings

    TSLA reports earnings on May 6th -- and investors might consider buying in prior to the event. TSLA has a strong track record of moving up the day of the release -- on avg. over 2% (past four quarters). One week after the release, on avg. the stock has moved up nearly 7%.

    We are optimistic on the improving regulatory environment, TSLA's continued push for sales abroad, where gas prices are more prohibitive for drivers, and solid, consistent growth.

    We suggest investors spring forward with TSLA in 2015.

    Readers wishing to join the discussion on TSLA should click the +FOLLOW button above the title of this article -- and those looking for latest updates should click +Get real time alerts.

    Tags: TSLA, long-ideas
    Apr 15 4:02 PM | Link | 1 Comment
  • IPO Lockup Expiration: Wayfair - Today
    • Today, March 31, 2015, marks the expiration of the 180-day lockup period for Wayfair expires; at this point, Wayfair's 10+ major pre-IPO shareholders have a first chance to sell their holdings.
    • The event could cause a significant price drop; research has shown declines of ~-5% in the days surrounding the expiration.
    • Wayfair has been successful in its first six months of public trading; insiders could be ready to take profits.
    • W is already down over 2% today.
    • See full article for more information.
    Tags: W
    Mar 31 9:52 AM | Link | Comment!
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